As tensions between the US and Iran continue to escalate, investors are betting heavily on geopolitical risk premiums! Crude oil ETFs attracted nearly $200 million in a single day, reaching a new high in 2020.

As tensions between the US and Iran continue to escalate, investors are betting on oil prices to continue rising, with one crude oil exchange-traded fund (ETF) receiving its largest single-day inflow of funds since the outbreak of the epidemic. Data shows that close to $200 million flowed into WisdomTree's WTI crude oil exchange-traded product on Tuesday, increasing the fund's total assets by more than a quarter to $915 million. The fund tracks oil prices through fully funded, collateralized swap contracts rather than directly holding futures contracts, thereby reducing its direct impact in the futures market. Last week, as US President Trump threatened military strikes against Iran, one of the world's largest oil-producing countries, WTI crude oil futures surged nearly 7%, marking the largest weekly gain since October last year. However, after the market opened on Monday, with tensions appearing to ease and the overall commodity sector weakening, oil prices quickly retraced their gains. Several days later, with multiple tense military interactions between Washington and Tehran, the possibility of further escalation still exists, and the inflow of funds mentioned above likely reflects investors positioning themselves for a potential rebound. Following urgent diplomatic efforts by several Middle Eastern leaders to persuade the Trump administration to abandon threats of withdrawing from negotiations, the US-Iran nuclear talks scheduled for February 6 have been reinstated and will be held in Oman. The US had earlier rejected Iran's proposal to move the meeting from Istanbul, Turkey to Omanthis standoff raised concerns throughout the Middle East, fearing that Trump might resort to military action instead. At least nine countries in the region have contacted the White House through the highest diplomatic channels, strongly urging the US not to cancel the meeting.